What is FSCS protection?

23 February, 2024 · 5 min read

If the financial firm you've used has gone out of business and you can’t get your money back, the FSCS (which stands for the Financial Services Compensation Scheme) can step in to pay you compensation directly. Set up by the government, it’s independent and the service is free.

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What are the rules?

Various FSCS eligibility rules apply, but the scheme can cover UK regulated banks, building societies, debt management firms, credit unions, funeral plans, insurance, investment firms, mortgage companies, payment protection insurance (PPI) and pensions.

The rules have been set by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) and the criteria are as follows:

  • The financial services firm must have failed and be unable to return your money itself – i.e. be 'in default'
  • The FCA or PRA must have authorised the firm when you used it
  • You must have actually lost money
  • You must be claiming for personal money you've lost – although some businesses and charities may be able to claim in some circumstances.

What is the FSCS protection limit for banks, building societies and credit unions?

If you have money held by a UK-authorised bank, building society or credit union that failed after 1 January 2017:

  • The FSCS protection covers 100% of the first £85,000 you have saved, per eligible person, per bank, building society or credit union (not per account).
  • The FSCS protects up to £170,000 for joint accounts.
  • The FSCS also protects ‘temporary high balances’ (which may be the result of life events such as a property sale, inheritance or redundancy) up to £1 million for six months from when the amount was first deposited.

You don’t need to do anything – the FSCS will compensate you automatically and aims to do this within 7 working days of the institution failing.

How can I tell if my account is protected?

The FSCS can only protect your money if it’s held by firms that are regulated by the FCA (Financial Conduct Authority) or the Prudential Regulation Authority (PRA).
To see if your bank's protected, use the Financial Services Compensation Scheme's checker. You just need the name of the bank, and to check that the six-digit 'FRN' under the bank's name matches the Financial Conduct Authority register number the bank lists on its own website (you can usually find this in the footer on the bank's homepage).

Which banks are linked for FSCS?

Not all banks are protected separately – where banks have merged or been acquired over the years, sometimes the protection is split between each brand.

For example, Lloyds, Halifax and Bank of Scotland are all part of the Lloyds Banking Group, but while Halifax and Bank of Scotland share protection, Lloyds has its own, separate protection. Meanwhile, NatWest, Royal Bank of Scotland (RBS) and Ulster Bank are all part of the NatWest Banking Group, but only NatWest and Ulster Bank share protection – RBS has its own, separate protection.

It is important to check if your bank shares protections with others because this may affect how much of your money is protected. A quick reminder – the FSCS protects 100% of the first £85,000 you have saved, per eligible person, per bank, building society or credit union (not per account). For example, if you have £50,000 with Halifax and £50,000 with Bank of Scotland, only £85,000 of the £100,00 that is protected. So it’s worth considering spreading your money across more than one financial institution to maximise your protection.
The FSCS has a handy Check Your Money Is Protected tool you can use to work out if your bank shares protections.

Is Revolut FSCS protected?

No. It is an electronic money institution and not a bank, so your money is not covered by the Financial Services Compensation Scheme (FSCS).

Is Monzo FSCS protected?

Yes. This bank isn't linked to any others for savings safety purposes. This means the £85,000 per person protection isn't shared between any other banks.

Is Chase FSCS protected? 

Yes. This bank isn't linked to any others for savings safety purposes. This means the £85,000 per person protection isn't shared between any other banks.

Why doesn’t ANNA need FSCS protection?

ANNA is a mobile business account that provides admin support and tax reminders, not a bank. This means that ANNA falls into the category of an ‘e-money account’ (also known as Electronic Money Institutions or EMIs).  

E-money accounts are protected by the FCA (the Financial Conduct Authority) but not by the FSCS.

But that doesn’t mean your money isn’t protected. Here’s how e-money and payment services providers are required to protect their customers’ funds.

How does ANNA keep your money safe?

When you deposit money into a bank account, your bank uses your money to make more money, by loaning it out to people via things like mortgages, credit cards overdrafts and other loans.

Because your money is technically at ‘risk’, bank deposits are covered by the FSCS up to £85,000.

Things work a bit differently with e-money institutions like the one ANNA uses. Your deposits are still held in a bank account but it’s not covered by the FSCS. Instead it’s protected by something called Safeguarding. It means that customers’ deposits are held separately from the e-money issuer’s own funds and can’t be loaned out by the bank. It just sits there. In fact, neither ANNA nor the e-money institution can do anything with your money unless you instruct us to – for example if you want to pay a bill, withdraw cash or buy something with your debit card.

We believe that safeguarding is a really effective way of protecting your money.

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